Choosing credit cards — how to pick the right one for you

A lot of people are surprised at how many credit cards there are to choose from. These products aren’t just given out by financial institutions now and you can get credit cards from supermarkets, department stores and even from your favourite football club or charity! Having a lot of choice is always a good thing but this choice may come with some problems — choosing the right card for your needs may be harder than you think.

There is one vital thing to remember before you start your selection process. Unless you pay off what you spend on any credit card when your next statement comes in then you will be charged interest. The money you are spending here is a loan and, like any other loan, it can cost you money. So, you may want to take some time to research your options. The lower the interest rates you are charged, the less money you’ll have to pay in interest.

But, choosing the right card isn’t always just a question of looking for the lowest interest rates. There are many different kinds of card deals that you might want to take advantage of that may have an influence on your decision. Let’s take a look at some of the options on offer at the moment.

• Balance Transfers: Some credit cards may offer you the chance to get a balance transfer deal when you apply. Here, you transfer the money that you owe on a different card (or cards) to your new one. Many people will do this because the balance transfer deal comes with preferential interest rates or even 0% interest. You may find that the term of the deal will vary here — some cards, for example, might offer you a lifetime balance transfer rate whilst others will have a deal for a set period only.
• Purchasing Discounts: Some card suppliers will offer new customers a period of time where they are given 0% or discounted interest rates on new spending. This may be given as part of a balance transfer deal or as a stand-alone offer.
• Discounted Interest Rates: In some cases you might prefer to take out a card that comes with lower interest rates than the norm. These deals may be set to last for a few months or may be offered as a lifetime deal.
• Cashback/Rewards: You may be offered special cashback or rewards schemes with a card. A cashback scheme will simply give you a specific amount of cash back usually based on a percentage of your spending. Rewards cards work in much the same way but here you may well be given loyalty points for schemes such as AirMiles or store loyalty programs as a percentage of your spending.
• Charity/Affinity: Some cards are branded with a charity or with another institution such as a football club. Here the company will give a percentage of your spending to your chosen charity/affiliate company.

If you are in the process of comparing credit cards then you may well find it useful to consider these options. You may still want to give special thought to the interest rates you’ll be charged — higher interest rates may not be a big deal to someone who pays their card off every month but they may be more important to those who regularly carry over a balance.